Before COVID-19 hit, American hop growers expected a record year of production in 2020, with planting set to surpass 60,000 acres for the first time in decades. The pandemic—and its ensuing closure of bars, restaurants, and taprooms—quickly revised that forecast.
Growers in Washington and Oregon were told by hop dealers to cut production roughly 7-10% to anticipate dips in demand from breweries. As the economic crisis continues, the future remains murky for brewers and hop producers alike. Current uncertainty in the hop market is likely to yield winners and losers—but who those will be is yet to be determined.
Even the systems by which brewers buy hops are out of whack. Some experts say conditions could benefit breweries purchasing hops ad hoc, while others predict companies are better off contracting to ensure a stock of hops. In either case, what’s happening now could have ramifications for years to come.
Breweries with large hop contracts—like Sierra Nevada Brewing Company or Rhinegeist Brewery—could find themselves with too many hops if their production dips, or with a shortage if their production has increased in response to high grocery store sales.
Jaki Brophy, communications director for Hop Growers of America, says breweries purchasing on the spot market—typically small, locally focused businesses—could benefit. Unused, contracted hops are likely to enter the spot market in greater quantities, sold by breweries who no longer need them—potentially at a discount. Conversely, the Brewers Association warns that breweries who don’t have contracts and buy hops on the spot market face an “extremely high supply surety risk” because “[non-contracted] acres represent an especially juicy target for reduction by growers” who need to cut acreage.
A major dip in demand for harvest 2020 hops could make growers more conservative in how many acres and which varieties they plant moving forward. Diane Gooding, vice president of Gooding Farms in Parma, Idaho, says she hopes to move toward an all-contract model in the coming years.
“If I don’t have it contracted in writing, I won’t grow it,” she says.
Gooding Farms currently keeps about 5-10% of its production non-contracted, far less than the 20-30% Gooding says her peers leave open.
“Contracts are bankable. They give us a safeguard against financial turbulence and inconsistency, plus contracts have a set pay schedule so I can anticipate cash flow,” she says. “But a lot of farms aren’t that conservative at all.”
Gooding says the pandemic has reinforced for her the importance of a diverse customer base; her farm already sells to multiple dealers and will continue to do so. She’s also considering adding varied revenue streams, selling not just hops but other agricultural products. In the coming years, she’d like to plant additional row crops that could be sold directly to consumers or to restaurants, and to start raising grass-fed chicken or beef to supplement the hop-growing operation.
Gooding’s wariness about the future speaks to broader concerns among hop farmers. They’re worried that overall demand for hops will drop during a year when supply was expected to be higher than ever. They’re also worried that the pandemic could shift breweries’ affinity for certain hops in unforeseen ways. Hop bines aren’t lettuce plants; farmers can’t just harvest them right away and plant something new as tastes shift. Hop plants generally don’t produce a full crop the first year; depending on climate, most take two to three years to reach full production.
It’s too early to say which of the possible scenarios will prevail in the coming months: overall demand for hops could drop if breweries close or sell dramatically less beer than expected. But operating breweries are unlikely to move away from strong-selling IPAs, which lately require increasing quantities of hops per barrel. If the reality is some combination of these two, it’s likely to skew the price structure and availability of certain hop varieties.
Michelle Palacios, administrator for the Oregon Hop Commission, says her constituent growers could be especially vulnerable to trickle-down results of taproom closures. Oregon hop farmers grow mostly high-aroma, low-alpha-acid hops of the sort favored by trendy IPA-producing craft breweries. Such breweries often rely heavily on taproom sales or local distribution in bars and restaurants—revenue that’s mostly cut off as COVID-19 shuts down the on-premise sphere. If those breweries don’t reopen or do so at much lower production volumes, it could significantly reduce demand for those hop varieties.
Harvest hops can be stored by dealers, of course, but that requires additional infrastructure costs. A glut of hop inventory also has the potential to create wild price swings for these varieties.
There’s not much data available yet measuring hop usage over the past two months, but spot market trends seem to be shifting in the way Palacios fears. Overall spot market volume on the online hop marketplace Lupulin Exchange is down significantly since COVID-19 hit, and the types of hops being purchased have also changed. Demand for coveted, buzzworthy (and typically expensive) hops like Citra, Galaxy, and Mosaic has dropped, while sales of more affordable, publicly bred hops like Cascade, Chinook, and Columbus have increased between February and March. This could be a result of breweries minding their budgets during an uncertain time.
As Peter Bissell, co-founder of Portland, Maine’s Bissell Brothers brewery, told Beer Edge podcast in late April, his brewery has been “stretching out” some of the specialty hops it would have used in one-off releases, and is instead using them to brew core beers. Not only are those core beers already “hits” for the brewery, but their painted cans are already printed and paid for. If breweries continue brewing through existing hop inventory for months rather than placing new orders, that could dramatically change the varieties and quantities they’ll order from dealers or buy on the spot market.
“It’s a little early to tell how [COVID-19] will impact supply, but we’re planning on some pretty significant acreage reduction and transitioning back to row crops for next season,” Gooding says. “A lot of growers are in that similar situation: you’re either going to see a bunch of reductions or major price dips or both. That’s the storm we’re preparing ourselves for.”
Before the industry can assess whether its 2020 production aligned with this year’s demand, it has to grow and harvest the year’s hops. Because hops are labor-intensive throughout their growing cycle, hop growers face challenges when it comes to keeping workers healthy in the face of COVID-19.
Growers who hire temporary agricultural workers through the H-2A visa program are responsible for housing and transporting them to work. They must provide these workers, many of whom do not speak English as a first language, the guidance and materials they need to stay safe in the fields and in provided housing. They should also be sensitive to the fact that workers may be dealing with emotional strain as they face a pandemic while far from friends and family members.
Some states have mandated growers reduce crew sizes and stagger workers’ shifts and breaks to ensure they can maintain social distancing. They may also require masks in addition to the long sleeves, long pants, and gloves workers normally wear. Gooding Farms is providing masks to its workers—though many prefer to wear homemade ones—and has rented additional hand-washing and sanitation stations to place in the fields. Parma, Idaho-based hop processor Mill 95 says some of its growers have begun buying groceries in bulk and distributing them to workers to keep them from having to shop at the grocery store.
Even with protections, these workers are some of the most vulnerable during a pandemic. Just this week, Washington State health, labor and industry agencies said they'd allow fruit farms to continue to provide bunk beds for workers, despite the potential problems of forcing close-proximity sleeping quarters.
According to the U.S. Department of Labor’s National Agricultural Workers Survey released in 2018, fewer than half of crop workers have health insurance, and only 29% have health insurance provided by their employer. Workers may fear punishment from their employer if they call out sick or are less productive as a result of necessary health procedures.
“We were lucky in that our growers’ workforce was only very momentarily decreased [as a result of H-2A visa delays],” says Amaya Aguirre-Landa of Mill 95. “But the difficulties have shifted: now that we have them here, we need to do our best to keep them safe and healthy.”
Hop growers and dealers are facing immediate questions about worker safety at the same time they’re making longer-term calculations about future demand. Neither is easy. The pandemic presents numerous uncertainties and threats, both in relation to worker safety and the future of the hops they’re tending and harvesting.
The entire supply chain, from workers to dealers to breweries, must try to align itself for the health of the industry. As all parties well know, that’s a tall order even under normal circumstances.
Bleeding Green, Pt. 2 — COVID-19 Forces Hop Growers to Confront New Concerns Over Supply, Safety
Words by Kate Bernot